ANJU MANISH GANGAR, NAVI MUMBAI V. ITO WD 22(3)(1), NAVI MUMBAI

ITA 7579/MUM/2013

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7167 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: DR P DANIEL
• Keywords: Unexplained investment
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI G S PANNU, ACCOUNTANT MEMBER & SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.7579/MUM/2013 ASSESSMENT YEAR : 2009-10 ANJU MANISH GANGAR, B-3-12/0:2, SECTOR 3, VASHI, NAVI MUMBAI 400 703. PAN AIBPG4309H VS. ITO WD 22(3)(1), VASHI NAVI MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : DR P DANIEL RESPONDENT BY : SHRI RAJESH KUMAR YADAV DATE OF HEARING : 11.06.2018 DATE OF PRONOUNCEMEN T : 15.06.2018 O R D E R PER G S PANNU, ACCOUNTANT MEMBER THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE C IT(A)-33, MUMBAI, DATED 31.10.2013, WHICH IN TURN HAS ARISEN OUT OF THE ORD ER PASSED BY THE ASSESSING OFFICER U/S. 144 OF THE INCOME TAX ACT, 1961 (HEREI NAFTER REFERRED TO AS THE ACT) RELATING TO A.Y. 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THE LEARNED C.I.T. (A) ERRED IN CONFIRMING TH E DISALLOWANCE OF EXPENSES AT 25% AMOUNTING TO RS. 3,33,295/- WITHOUT ANY BASIS OR VALID REASON WHATSOEVER. 2. THE LEARNED C.I.T. (A) ERRED IN LAW AND IN FAC TS IN STATING THAT THE ADDITION ON A/C OF UNEXPLAINED INVESTMENTS SHOULD B E ASSESSED IN AN EARLIER YEAR WHEN SUCH ASSTT. YEAR WAS NOT BEFORE T HE CIT(A) FOR CONSIDERATION./ 3. THE LEARNED C.I.T. (A) ERRED IN DIRECTING THE A.O. TO TAX AMOUNT OF RS.36,40,000/- IN THE ASSTT. YEAR 2008-09 WHEN THER E WAS NO APPEAL FOR THAT YEAR IS PENDING BEFORE HIM. 4. THE ORDER PASSED BY THE LEARNED C.I.T. (A) IS B AD IN LAW. ITA NO.7579/MUM/2013 ANJU MANISH GANGAR 2 ALTHOUGH ASSESSEE HAS RAISED MULTIPLE GROUNDS OF AP PEAL BUT ESSENTIALLY SUBSTANTIVE DISPUTE IS MANIFESTED IN GROUND OF APPEAL NO.2 AND 3 ABOVE, WHICH ARISES FROM THE DIRECTION OF THE CIT(A) TO TAX AN AMOUNT OF ` 36,40,000/- AS UNEXPLAINED INCOME IN A.Y. 2008-09. THE BASIC CONTENTION OF THE APPELLAN T IS THAT IT WAS BEYOND THE JURISDICTION OF THE CIT(A) TO HAVE GIVEN SUCH A DIR ECTION BECAUSE THE PROCEEDINGS FOR A.Y. 2008-09 WERE NOT OPEN BEFORE HIM, IN AS MUCH A S THE ASSESSMENT YEAR BEFORE THE CIT(A) WAS THE INSTANT A.Y. 2009-10. 3. IN ORDER TO APPRECIATE THE SAID CONTROVERSY, FOL LOWING DISCUSSION IS RELEVANT. THE APPELLANT BEFORE US IS AN INDIVIDUAL IN WHOSE C ASE AN AIR INFORMATION WAS RECEIVED REGARDING SALE OF IMMOVABLE PROPERTY FOR W HICH ` 36,40,000/- HAS BEEN ADDED TO THE RETURNED INCOME AS UNEXPLAINED INVESTM ENTS BY THE ASSESSING OFFICER. NOTABLY, THE ASSESSMENT WAS COMPLETED BY THE ASSESS ING OFFICER EX-PARTE U/S. 144, AFTER NOTICING NON-APPEARANCE BY THE ASSESSEE INSPI TE OF ISSUANCE OF NOTICE OF HEARING. WHEN THE MATTER TRAVELLED TO THE CIT(A) VARIED SUBMISSIONS AND EXPLANATIONS WERE FURNISHED INCLUDING SUCH DOCUMENT S WHICH WERE NOT FILED BEFORE THE ASSESSING OFFICER. THE CIT(A) CALLED FOR COMME NTS FROM THE ASSESSING OFFICER AND AFTER CONSIDERING THE SAME HE HAS PROCEEDED TO DISPOSE OF THE APPEAL OF THE ASSESSEE. BE THAT AS IT MAY, IN THE ULTIMATE ANALY SIS, THE CIT(A) TOOK INTO CONSIDERATION THE REPORT OF THE ASSESSING OFFICER, WHICH SHOWED THAT ASSESSEE HAD ACQUIRED A LEASEHOLD PROPERTY VIDE REGISTERED DOCUM ENT NO.1367/2008 DATED 31.01.2008, WHICH WAS SOLD VIDE REGISTERED DOCUMENT NO.5803/2008 DATED 17.06.2008. THE ASSESSEE HAD, INTER-ALIA, CLAIMED BEFORE THE CIT(A) THAT THE TRANSACTION DID NOT BELONG TO HER AND THAT SHE HAD MERELY RECEIVED COMMISSION OF ` 1,75,000/- FOR ARRANGING THE SAID DEAL. AN ALTERN ATIVE PLEA WAS ALSO MADE THAT THE DATES OF TRANSACTION SHOW THAT THE INVESTMENT PERTA INED TO AN EARLIER YEAR AND NOT THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER CONSIDERATION. THE CIT(A), IN HIS OPERATIVE PORTION OF HIS ORDER, HELD AS UNDE R: THE ACQUISITION AND TRANSFER HAS TAKEN PLACE IN A SPAN OF LESS THAN 6 MONTHS. AO WAS, THEREFORE, RIGHT IN TREATING THE A MOUNT OF INVESTMENT IN THIS TRANSACTION AT RS 36,40,000/-. HOWEVER, AS RI GHTLY POINTED OUT BY ITA NO.7579/MUM/2013 ANJU MANISH GANGAR 3 THE AR OF THE APPELLANT THE INCOME FROM UNEXPLAINED INVESTMENT NEEDS TO BE TAXED IN FY 2007-08 RELEVANT TO AY 2008-09. THE ACTION OF THE AO IS MODIFIED TO THAT EXTENT WITH A DIRECTION TO INCL UDE THE SAID INCOME IN AY 2008-09 INSTEAD OF AY 2009-10. THIS GROUND IS D ECIDED ACCORDINGLY. THE GROUND RAISED BY THE APPELLANT IS DISMISSED SUB JECT TO ABOVE DIRECTIONS. 4. IN TERMS OF THE ABOVE DISCUSSION, IT FOLLOWS THA T THE CIT(A) DELETED THE ADDITION FOR THE IMPUGNED YEAR WITH A DIRECTION THA T THE SAME INCOME IS LIABLE TO BE INCLUDED IN EARLIER ASSESSMENT YEAR I.E. 2008-09. 5. BEFORE US, THE GRIEVANCE ARTICULATED BY THE LEAR NED REPRESENTATIVE IS THAT THE CIT(A) OUGHT TO HAVE CONFINED HIMSELF TO DECIDE THE VALIDITY OF THE ADDITION IN THE INSTANT ASSESSMENT YEAR AND COULD NOT HAVE DIRECTED THE ASSESSING OFFICER TO INCLUDE SUCH INCOME FOR TAXATION IN A.Y. 2008-09, WHICH WAS NOT BEFORE HIM. FOR THE SAID PROPOSITION RELIANCE HAS BEEN PLACED ON VARIOUS DEC ISIONS, INTER ALIA, MATHURDAS B MOHTA VS. CIT (1965) 56 ITR 269 (BOM); IVAN SINGH V S. ACIT, ORDER DATED 17.05.2013 IN ITA NO.75/PNJ/2012 FOR AY 2008-09; AI CT VS. IVAN SINGH IN TAX APPEAL 28 OF 2013 (BOM); ITO VS. MURLIDHAR BHAGWAND AS (1964) 52 ITR 335 (SC). 6. ON THE OTHER HAND, ON THIS ASPECT, LEARNED DR AP PEARING FOR THE REVENUE HAS DEFENDED THE DECISION OF THE CIT(A) BY PLACING RELI ANCE THEREON AND CONTENDED THAT ASSESSEE HAD HERSELF ADMITTED THAT THE INVESTMENT B ELONGED TO AN EARLIER YEAR AND SINCE IT WAS UNEXPLAINED, NO MISTAKE WAS MADE BY TH E CIT(A) IN DIRECTING THE ASSESSMENT OF SUCH INCOME IN THE RELEVANT YEAR. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE DISPUTE BEFORE US LIES IN NARROW COMPASS IN AS MUCH AS WHETHER THE CI T(A) WAS COMPETENT TO DIRECT THAT A PARTICULAR INCOME WAS ASSESSABLE IN AN ASSES SMENT YEAR WHICH WAS NOT BEFORE HIM. PERTINENTLY, IN THE INSTANT CASE, THE ASSESSMENT WHICH HAD COME UP FOR CHALLENGE BEFORE THE CIT(A) WAS FOR A.Y. 2009-10 IN WHICH THE ASSESSING OFFICER HAS SOUGHT TO TAX A SUM OF ` 36,40,000/- AS UNEXPLAINED INVESTMENT IN A TRANSAC TION OF IMMOVABLE PROPERTY REPORTED AS PER AIR INFORMATION. APART FROM OTHER DEFENCES, ONE OF THE POINTS RAISED BY THE ASSESSEE BEFORE THE CIT(A) WAS THAT EVEN IF THE INVESTMENT WAS TO BE TREATED AS UNEXPLAINED, THE YE AR OF TAXABILITY WAS NOT CORRECT AND, THEREFORE, NO ADDITION WAS MAINTAINABLE IN THI S YEAR. THE ASSESSEE SUPPORTED ITA NO.7579/MUM/2013 ANJU MANISH GANGAR 4 THIS PROPOSITION BY POINTING OUT THAT THE INVESTMEN T, AS BEING REPORTED IN THE AIR, WAS INDEED IN THE EARLIER ASSESSMENT YEAR CORRESPON DING TO THE DATE OF A PURPORTED DATE OF ACQUISITION I.E. 31.01.2008. OSTENSIBLY, T HE ISSUE BEFORE THE CIT(A) WAS AS TO WHETHER THE SAID UNEXPLAINED INVESTMENT COULD BE TAXED IN THE INSTANT ASSESSMENT YEAR, WHICH COVERS THE PREVIOUS YEAR FR OM 01.04.2008 TO 31.03.2009. THE CIT(A) TOOK COGNIZANCE OF THE AFORESAID FACT SI TUATION AND FOUND IT FIT TO SET ASIDE THE ACTION OF THE ASSESSING OFFICER IN ASSESS ING THE SAME IN THE INSTANT YEAR. HOWEVER, HE SOUGHT TO MODIFY THE ASSESSMENT BY DIRE CTING THAT SAID INCOME BE INCLUDED FOR ASSESSMENT IN A.Y. 2008-09, A YEAR WHI CH WAS NOT BEFORE HIM. THE CONTROVERSY IS DIRECTLY SETTLED BY THE HONBLE SUPR EME COURT IN THE CASE OF ITO VS. MURLIDHAR BHAGWANDAS (52 ITR 335), WHICH LAYS DOWN A PRINCIPLE THAT THE JURISDICTION OF THE CIT(A) IS CONFINED TO THE ASSES SMENT ORDER FOR THE PARTICULAR YEAR THAT WAS UNDER APPEAL BEFORE HIM. THE CIT(A) IS CO MPETENT TO ISSUE DIRECTIONS WHICH ARE NECESSARY TO DISPOSE OF THE APPEAL IN RES PECT OF THE YEAR OF ASSESSMENT WHICH IS BEFORE HIM AND IT COULD NOT EXTEND TO ANY OTHER ASSESSMENT YEAR. THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SIMILAR POSITION HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT ALSO IN THE CASE OF MATHURDAS B MOHTA (SUPRA). IN THE CASE BEFORE THE HONBLE BOMBAY HIG H COURT, THE ISSUE WAS RELATING TO CAPITAL GAINS ARISING ON SALE OF A TEXTILE MILL ON 25.10.1946. THE ASSESSING OFFICER INCLUDED THE CAPITAL GAINS IN THE TOTAL INCOME OF T HE ASSESSEE FOR A.Y. 1947-48 AND THE APPELLATE COMMISSIONER WHILE DEALING WITH ASSES SEES APPEAL FOR A.Y. 1947-48 HELD THAT THE CAPITAL GAIN WAS NOT ASSESSABLE IN TH E A.Y. 1947-48. AFTER RECORDING SO, THE APPELLATE COMMISSIONER GAVE A DIRECTION THA T THE SAID CAPITAL GAIN WAS TAXABLE IN A.Y. 1948-49. THE DIRECTION SO ISSUED B Y THE COMMISSIONER WAS HELD TO BE UNTENABLE AS ACCORDING TO THE HONBLE BOMBAY HIG H COURT, THE JURISDICTION OF THE APPELLATE COMMISSIONER WAS STRICTLY CONFINED TO THE ASSESSMENT OF THE PARTICULAR YEAR OF APPEAL BEFORE HIM. THE FACTS IN THE INSTAN T CASE STAND ON SIMILAR FOOTING IN AS MUCH AS IT WAS COMPETENT FOR THE CIT(A) TO DECID E WHETHER THE IMPUGNED AMOUNT OF INVESTMENT WAS ASSESSABLE IN THE INSTANT YEAR OR NOT; BUT, IT WAS NOT WITHIN HIS JURISDICTION TO DIRECT IN THE INSTANT AP PEAL THE APPROPRIATE YEAR IN WHICH THE INCOME IS LIABLE TO BE TAXED. THEREFORE, CONSI DERING THE RATIO OF HONBLE SUPREME COURT IN THE CASE OF MURLIDHAR BHAGWANDAS ( SUPRA), WHICH HAS BEEN ITA NO.7579/MUM/2013 ANJU MANISH GANGAR 5 FURTHER ENUMERATED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF MATHURDAS B MOHTA (SUPRA), WE HOLD THAT THE DIRECTION OF THE CO MMISSIONER SAYING THAT THE AMOUNT OF ` 36,40,000/- IS ASSESSABLE IN A.Y. 2008-09 IS MISCO NCEIVED AND BEYOND HIS JURISDICTION. WE HOLD SO. THUS, ON THIS ASPEC T THE ASSESSEE SUCCEEDS. 8. THE ONLY OTHER ISSUE RAISED BY THE ASSESSEE IS A GAINST THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADHOC DISALLOWANCE O F 25% OUT OF VARIOUS EXPENSES, WHICH RESULTED IN DISALLOWANCE OF ` 3,33,295/-. ON THIS ASPECT THE ONLY PLEA OF THE LEARNED REPRESENTATIVE IS THAT THE DISALLOWANCE MAD E @25% IS EXCESSIVE AND THAT RESTRICTING THE DISALLOWANCE TO 10% WOULD BE SUFFIC IENT. WE FIND THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS ON A PURELY ADHOC BASIS, OSTENSIBLY, NOTICING THE ABSENCE OF THE ASSESSEE DURING THE ASS ESSMENT PROCEEDINGS. BE THAT AS IT MAY AND IN THE ABSENCE OF ANY ADVERSE HISTORY ON THIS ASPECT, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO 1 0% OF THE EXPENSES AND ALLOW NECESSARY RELIEF ACCORDINGLY. THUS, ON THIS ASPECT ASSESSEE PARTLY SUCCEEDS. 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 15 TH JUNE 2018. SD/- SD/- (RAVISH SOOD) (G S PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 15 TH JUNE, 2018. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T , MUMBAI. 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI